Good news! With April 15 falling on a Sunday, and Emancipation Day observed the next day in the District of Columbia, your 2011 tax return isn’t due until April 17 this year. While that may give you two extra days to procrastinate, the earlier you start the process, the easier the task will be. We asked local tax experts for their preparation tips for tax filing season, whether you’re taking on the job yourself or using a CPA.
Cathy Goldsticker, tax partner BROWN, SMITH & WALLACE
- Gather and organize your tax deductions. You want to start looking through your records and receipts for charitable donations because they tend to be the harder ones to accumulate. Look for letters from charities and give them to your tax preparer to get the deduction.
- Keep an eye out for brokerage statements in the mail. Investment statements will come out on Feb. 15, but frequently, brokers will issue corrected statements after that date. Be sure to give your tax preparer the most current one.
- Think about getting adequate funding if you will owe money. Make sure the funds are available or that you’ve been budgeting for the expense. If you need to sell some stock, you have a couple months to watch and sell when they’re high.
- Be aware of new tax rules. The IRS has issued new rules for disclosing foreign bank accounts and assets. Your CPA can guide you through the necessary steps.
- Don’t wait until the last minute. If everyone’s doing their taxes at once, the service won’t be as good, whether you’re calling your broker or doing it online with the masses.
Linda O’Connor, financial adviser, CRPC WELLS FARGO ADVISORS
- Give yourself an earlier deadline. No one likes to do their taxes, but if you sit down on a Sunday for a couple hours, you can take care of it. The thought of doing your taxes is way worse than the reality.
- Find a method to the madness: Use the checklists or directions provided by your CPA or an online resource like Turbo Tax to guide you. The IRS web site (irs.gov) also provides directions for this year’s new forms.
- Don’t forget about prepaid interest. If you purchased or refinanced a home last year, you might have paid a point or two, which may be deductible as mortgage interest, and then forgot in the chaos of paperwork.
- Go through credit card statements for charitable donations. Many people now make online donations and receive email receipts that they forget about or delete. If you used a specific card to make the donation, going through the statements can easily pinpoint those transactions.
- Tell your CPA about IRA or 401(k) contributions. Whether the contributions are deductible or not (depending on income and percentage funded), you have to report it on your tax return.